Estate planning is simple way of ensuring that your estate is passed onto your beneficiaries in the most financially efficient and tax effective way.
Estate planning has two main aims:
- to avoid the likelihood of any dependants suffering financially in the event of your death; and
- to minimise the risk of family disputes over your estate.
The most commonly used estate planning tool is a Will. A Will outlines how you want your assets distributed after your death and provides a simple way to ensure your family members are looked after financially in the event of your death.
How does a Will work?
A Will can include:
- assets, such as houses, cars, money, shares, cash; and
- specific belongings such as books, photos, antiques, etc. If you are listing specific items make sure that they are easily identified.
Superannuation and life insurance cannot be distributed in a Will.
Unfortunately, some people leave making a Will to a time when they are facing uncertain circumstances, such as divorce or change in financial circumstances. However, if you consider estate planning in a practical sense, there should never be a time when you don’t have a Will, particularly if you have people who are financial dependent on you.
It’s important to note that if you have debts when you die, they must be paid from your estate before it is distributed according to your Will.
What happens if I die without a Will?
If you die without a Will, you leave what is called ‘intestacy’. This means that you have not validly disposed of some or all of your assets. Some people think that if you die without a Will, the Government takes all your assets, however this isn’t true. This could only happen if you have no living next of kin.
If you die without a Will, your assets will be distributed according to a legal formula. This might mean that your assets do not end up with the person you would have chosen and you have no control over who distributes your assets. It’s therefore best to keep your Will in a safe place and make sure someone you trust knows where it is.
How can a financial adviser help?
A financial adviser can help ensure you have a solid estate plan in place – one that includes a relevant Will, adequate life insurance and instructions as to how all other assets are dealt with in the event of your death. For more information about the most financially efficient and tax effective way to distribute your assets, speak with your financial adviser today or contact us.